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Report BFA - Bankia 2014 / Accomplishing our plansRating




Mortgage covered bonds




The ratings agencies Standard & Poor’s Ratings Services (S&P) and Fitch Ratings (Fitch) upgraded their ratings for Bankia, with the former also significantly upgrading the rating of the bank’s mortgage covered bonds.

These decisions were prompted by the strengthening of the institution’s capital, completion of the Strategic Plan ahead of schedule, the uptick in the institution’s business, the healthier position of the financial sector, and the reduction in Spain’s sovereign risk.


On 27 November, S&P raised Bankia’s Stand Alone Credit Profile (SACP) a notch from ‘b+’ to ‘bb-’, as well as the institution’s long-term rating from ‘BB-’ to ‘BB’. This lower risk profile reflects the strength of Bankia’s capital and the lower economic risk to which the banking sector is exposed. At the same time, the outlook was revised from positive to negative due to the downward pressure of the new Bank Recovery and Resolution Directive (BRRD), which is expected to result in smaller bailouts for banks in the future, and has prompted the ratings agencies to downgrade their outlook for banks receiving state aid to negative. S&P currently calculates Bankia’s rating including a notch for state aid. The agency considers that the institution is systemically very important at national level.

Previously, on 4 June, the agency ratified the long-term rating at ‘BB-’, raising the outlook from negative to positive.

It upgraded Bankia’s mortgage covered bond rating by three notches in 2014 from ‘BBB/Negative’ to ‘A/Negative’ in two separate rating announcements during the year. Firstly, the agency raised the rating two notches on 11 June from ‘BBB/Negative’ to ‘A-/Positive’ thanks to the improved maturity profile of all the bonds in circulation and the level of overcollateralisation due to the measures carried out in relation to bonds retained on the balance sheet during the first half of the year. The ratings agency also upgraded Bankia’s long-term outlook to positive on this date. On 4 December, the mortgage covered bond rating was increased a notch from ‘A-/Positive’ to ‘A/Negative’ as a result of the improvement in Bankia’s long-term rating and the downgrading to a negative outlook.


On 15 April, Fitch ratified the long-term ‘BBB-’ rating, leaving the outlook at negative due to the implications of the BRRD. Nonetheless, during its review, the agency upgraded Bankia’s Viability Rating (VR) two notches from ‘b’ to ‘bb-’, after stressing that, in its opinion, the institution had made good progress. In any event, Bankia’s long-term rating is shaped by the Support Floor Rating, standing at ‘BBB-’, given the institution’s systemic importance at a national level.

This agency began issuing a rating on the mortgage covered bonds on 6 March, giving them the same ‘BBB+’ rating with a negative outlook as the bank’s long-term rating. On 25 September, it subsequently ratified the ‘BBB+’ rating, but upgraded the outlook from negative to stable.


The agency DBRS also began publishing ratings for Bankia’s mortgage covered bonds in 2014 (27 September). Its first rating was ‘A (low)’, subsequently raising this on 17 December, off the back of a review of its methodology for rating mortgage covered bonds, to ‘A (high)’, which is the current rating.

In October 2013, Bankia announced that it had decided to end its contractual relationship with Moody’s. The ratings this agency continues to publish for Bankia are therefore non-participating ratings, i.e. Bankia does not take part in reviewing the agency’s ratings; the latter basing its decisions solely on publicly available information on the institution. The agency is solely responsible for deciding when to publish ratings for Bankia.

In addition to the institution’s improved performance, Bankia’s ratings also benefited from the decision by S&P and Fitch to raise the credit rating of the Kingdom of Spain by a notch to ‘BBB’ and ‘BBB+’, respectively, both with a stable outlook. DBRS, meanwhile, ratified the ‘A (low)’ rating, but upgraded the outlook from negative to stable. In general, the improved sovereign debt rating has had a positive effect on the banks’ ratings. The agencies also upgraded their outlook on banking sector risks.

Bankia’s ratings were upgraded during the year due to the bolstering of capital, progress made with its Strategic Plan and the upturn in business

Contrasting with these positive factors, the European Parliament’s approval in April 2014 of the BRRD had a negative impact on the ratings of banks receiving state bailouts. The BRRD aims to minimise state aid for ailing banks, establishing that shareholders and subordinated and preferential creditors should be the first to come to a bank’s rescue.

In this regard, both S&P and Fitch give European banks a negative outlook when their ratings include, to a greater or lesser extent, notches for state aid. It is expected that the ratings agencies will set ratings in 2015 based on the partial or full withdrawal of state aid on a bank-by-bank basis.

Variation in Bankia’s ratings
in 2014

Rating issuer
S&P Fitch
DEC.13 DEC.14 DEC.13 DEC.14
Long-term BB- BB BBB- BBB-
Outlook Negative Negative Negative Negative
Viability rating b+ bb- b bb-
Short-term B B F3 F3
Mortgage covered bond rating
  S&P Fitch DBRS
DEC.13 DEC.14 DEC.13 DEC.14 DEC.13 DEC.14
Rating BBB A - BBB+ - A (high)
Outlook Negative Negative - Stable - -